The Hidden Influence of China’s Foreign Investments on Global Diplomacy

By: Audrey Taylor

After a year of Russia’s invasion of Ukraine, the United States has publicly condemned China’s economic and military aid to Russia, adding to growing tensions between the two countries (Edelman 2023). Contrastingly, responses from countries in the Global South have been mixed due to the complex economic ties that many countries have with China’s financial investment along trade routes and industrial development (Seib 2022). The lack of united global condemnation of Russia’s invasion of Ukraine highlights the growth of China's sphere of influence and the shifts in international alliances resulting from its foreign contributions in the Belt and Road Initiative and South Pacific.

Recently, China has economically supported Russia and considered sending military aid to Russia, a move that analysts believe could set dangerous precedents related to future Chinese military actions against Taiwan (Edelman 2023). The United States has condemned Russia’s invasion of Ukraine, and warned that continued Chinese support of Russia would “alienate them from a number of countries in the world” (Edelman 2023). However, countries in the Global South have abstained from making public declarations about Chinese involvement with Russia or continued to engage in trade and economic development with China. The recent March meeting between Vladimir Putin and Xi Jinping demonstrates that the two leaders are still pursuing a “strategic partnership” despite pressure from the United States and other Western countries (Isachenkov 2023). Although China has called for peace talks and a ceasefire in Ukraine, it has also notably refrained from urging the removal of Russian forces in Ukraine.

Many countries in the Global South, such as India, South Africa, and Qatar, have perceived Chinese economic investment as an alternative path to development, especially when compared to the extractive history of the Global North. China’s history as the victim of Western imperialism allows it to present itself as an ally to countries in the Global South. However, the United States’ expectation that other countries have the ability to condemn China publicly or limit economic ties with them fails to consider the deep and extensive economic connections that China has already established with nations in the Global South.

Given China’s history of significant economic involvement through the Belt and Road Initiative with countries in the Global South, it is key to understand how these economic ties have shifted over time. China’s Belt and Road Initiative was launched in 2013 by President Xi Jinping to finance large-scale infrastructure projects as a way of increasing Chinese trade and foreign influence. As of 2023, China has signed over 147 countries to the BRI, which accounts for around 40% of global GDP (McBride 2023). Overall debt to China in BRI countries has increased since 2013, and is exacerbated by Chinese loans that are close to a market interest rate and inflated costs of construction (McBride 2023). The international loans provided by China are easier to obtain than loans from the International Monetary Fund due to the lack of conditions that accompany the loan, longer term loans, and lower interest rates (Milanović 2022). China’s use of BRI funding for infrastructure projects creates unsustainable debt in countries that are then reliant on Chinese or other foreign aid, thus limiting their ability to disagree with China on political and social fronts.

In Africa, more than 10,000 Chinese-owned companies are currently operating; from 2001 and 2018, “China lent approximately $126 billion to African countries and invested directly some $41 billion” (Seib 2022). The use of Chinese investment to influence diplomacy has also resulted in multiple other countries cutting ties with Taiwan,  resulting in Taiwan only being recognized by 13 sovereign states, and indicates the power of Chinese economic support on influencing global relations (Al Jazeera 2023).

Although countries have faced economic difficulties due to the Russian invasion of Ukraine, this hardship sometimes increases reliance on China’s economic support. Xi and Putin are utilizing sentiments of “anti-Westernism” to appeal to countries that have experienced Western military intervention, proxy wars, and stringent economic programs (Mishra 2023). Anti-Westernism, which has increased in many countries after global inequitable vaccine distribution policies exacerbated the Covid-19 pandemic, is heightened by Xi’s economic involvement in countries in the Global South. Russia and China have deepened ties with Africa and other countries in the Global South, marking a contrast to the lack of effort to develop mutual engagement from the Biden administration.However, the United States has underestimated the influence China holds with countries in the Global South, and the importance of maintaining strong relationships with these countries. Analysis of to what extent countries in the Global South support China’s relationship with Russia is important to determine China’s shifting role as a leader in international economic development, and how these countries will support any actions by China to resist Western power.

References

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